A favicon is the icon that shows in the URL bar for your domain name.

What is the purpose of a favicon?

The favicon distinguishes your website with its own icon when people visit your site.  This icon can be seen in the tab or the URL bar of your visitor's browser.  For example, if you visit http://www.webhostinghub.com, you will see:

How do I make a favicon?

The favicon must be an image format called .ico.  Most image editors do not make .ico files, however there are free websites online that do. For example, http://www.favicon.cc/ is a great site for making favicons as it'll re-size your image for you. You can make a favicon from scratch, or use your own image.  In this example, I will use my own image from my computer.  The main page of favicon.cc looks like this:

Click Import Image on the left side of the page, and the following screen will appear:

Click on Choose File and find the image on your computer.  Click Open on the image and make sure "Shrink to square icon" is selected.  Then click on Upload and your image will appear:

On this page it will show how your favicon will look in the browser.  If you like how it looks, click "Download Favicon." This will automatically download the favicon.ico file to your computer.  Now all you have to do is log into your cPanel File Manager. In the File Manager, upload the favicon.ico file into your public_html folder. If it is for an Addon Domain, the favicon will go in the Addon Domain directory.  That is it!  Now your site will have its own icon in the Internet browser.